After spending the past 2 days talking with auto execs and investors in NY, it struck me as odd that the question of the day was “What’s your full year Europe outlook?” The real question is, what’s in store for 2013 in Europe. It’s clear that the industry is in sync with a market down 6% for 2012, with more conservative companies looking closer to the 9-10% drop.
Clearly the drop is fueled by the Latin collapse in Italy, Spain and France and given July and August — where France turned in a weak -11% performance — I think a negative 6-8% will remain the outlook, even through the Paris Auto Show at the end of this month. The real issue is not 2012. I am hearing more and more concerns over continuing decline in 2013, dispelling the myth that “it can’t get any worse.”
- Germany looks to be slowing and we have rumors this week of VW cutting H2 production by up to 10%, meaning VW will fight to hold it’s home share – bad news for GM/Opel and Ford.
- The German marques will then continue to keep up the heat in peripheral markets. Any volume stabilization could come at the further expense of margin in France and Italy. Bad news for Fiat but even worse for PSA as France has more room top drop.
- WE could slide another 5% in 2013 even as local automakers squabble over who’s moving first to close capacity with France the biggest risk. This could be the year where we see the market give Marchionne and Varin cover to pull the trigger on further downsizing.